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Why a Slim Majority of the Public Opposes the New Health Care Bill

The full impact of the recently passed health care legislation will not be felt for a number of years, with most of the provisions not kicking in until 2014, but in the short term opposition to the legislation can be found among three broad ideological groups: those on the Right, those on the Left – and those in the Center. As I noted in earlier blog posts, during the year long run-up to passage of the bill, public support for health care reform gradually dropped. Today, according to most polls I’ve seen, the public continues to oppose the newly-minted law, despite the campaign-style effort by Democrats and Obama to rally support for it. Thus, pollster.com’s latest composite poll of the polls lists 51.6% against reform with 40.2% supporting, a margin that has slightly widened since health care passed.

That those on both the Left and the Right remain opposed to the bill ought not to be surprising. When this debate first began last summer, I gave several talks in which I predicted that rather than fundamental health care reform, Congress was far more likely to pass insurance reform. In many respects, this is exactly what occurred; this is a very conservative piece of legislation. Essentially, it expands health care coverage to an additional 30 million people, and pays for that through a series of tax hikes, mainly by taxing investment income on the highest income earners and by taxing health care plans that offer extensive benefits. Combined with a projected decrease in spending on Medicare (more on that below), the CBO projects that it will be costly, but largely revenue neutral, if not a deficit reducer. Rather than restructure how health care is provided in the United States by, for example, expanding government-run programs or creating a public option, the legislation maintains the existing fee-for services, employer-based system now in place. Not surprisingly, conservatives oppose what they see as essentially a costly redistributive program, funded by tax increases, designed to expand health care coverage. Liberals, on the other hand, see this as essentially a giant subsidy for insurance companies, hospitals and doctors who stand to reap millions in profits because of the insurance mandate and increased demand for services. According to projections, private insurance plans could see enrollment jump by 16 million, with the rest of the newly-insured eligible for coverage through state-run Medicaid programs.

To be sure, it is not clear that insurance companies will make out as well as liberals fear. The provisions for state-supervised “exchanges”, through which some insurers would be required to sell policies to individuals and small businesses, means that the insurance industry will be far more heavily regulated than before. (Consumers who are not insured through their employer can make use of these exchanges.) The worry, for insurance companies, is that if healthy people opt to pay a penalty, rather than sign up for health insurance, companies will be left paying out much higher benefits because of a higher risk pool. This is precisely what happened in Massachusetts – many healthy people opted to pay the minimal penalty rather than pay for health insurance, and insurance companies sought to raise rates in response. Hence the mandates in the federal bill requiring most people to purchase health care insurance.

Those mandates, however, while perhaps economically necessary, run against the grain of American political culture and may pose a legal difficulty as well (although I suspect the courts will stay out of this area entirely.) Simply put, Americans do not like to be told by the government to do something, especially when it is to benefit a portion of the electorate – largely low-income workers – who lack political clout.

But there is a bigger problem with the legislation, in my view, one that primarily accounts for the lack of support among centrists as well. Most economists that I have read believe that the legislation will expand demand for health care services, but without putting a huge dent in escalating health care costs. I have noted repeatedly in this blog that the vast majority of Americans – over 80% by most polls – are satisfied with their current health care coverage. Support for reform was largely predicated on the assumption that reform legislation would contain escalating health care premiums and expenses. The big question is whether this current legislation will do so. Most economists don’t think it will – and that’s why many moderates oppose it. The biggest unknown centers on whether the government can achieve the reduction in Medicare payments and costs that formed the basis of the CBO projection that this bill will be revenue neutral. Even the CBO qualified its assessment, by noting: “It is unclear whether such a reduction in the growth rate of [Medicare] spending could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or through reductions in access to care or the quality of care.”

If seniors perceive that the savings come through a reduction in Medicare services, opposition to this plan is likely to grow. Similarly, if hospitals calculate that a reduction in government reimbursements for Medicare services make their participation in the program unprofitable, they may opt out of the program entirely. Both spell bad news for the future of this legislation.

My broader point is that most of the public – even many who support the expansion in coverage – don’t believe this bill will control costs, as this recent Gallup Poll indicates:

At this point, I don’t see these numbers changing until voters see health care costs going down.

Of course, it is impossible to fully discuss all the permutations of this bill in a single blog post, particularly when its most important provisions won’t go into force – if at all! – for several years. (This site is one of several that provides a good overview.) But in my next post, I want to address five issues related to health care that I think have been underplayed in the media coverage so far, but which will go a long way toward determining whether Obama and the Democrats get any political mileage from this bill.

5 comments

Is it fair to say there’s no turning back? For instance, “welfare reform” was as close as Republicans came to pushing a “repeal” of the original system. Are there any historical cases of successful entitlements repeal?

To the extent that unemployment stays high for the foreseeable future, and welfare cuts would tap poor white voter anger, “health care” is going to be the new “welfare.” Maybe the conservatives have already figured that out. Health care critics, like welfare critics, are going to be around a long time.

Your insight certainly held up on the distinction between health care reform and insurance reform. It’s plain that “health care costs going down” is impossible. The best we’ll do is throttling back the increases — “cost containment.” As you suggest, once the private sector begins to fail in its tougher social mandate, the next round of debate will heat up.

On the other hand, this isn’t as easy a win for conservatives. First, it’s not as easy to stigmatize the sick as it is to stigmatize the poor. And beyond that, the fiscal conservatives don’t yet have a sound argument. It was pretty clear this time that the usual revisionist spin that the solution will be further privatization or deregulation doesn’t sway many people. The conservatives ONLY gained ground when they talked about how dismal the Medicare system would be under the new law. I’m all for letting them propose co-ops and other Third Way solutions, though it’s pretty clear it’s not going to scale well enough to dig us out of the hole. Maybe some evil genius will invent a health care Laffer Curve, and the two sides will be off to the races again.

Marty – I said when the legislative first passed that it wouldn’t be repealed as long as Obama is president. Beyond that, I don’t know. I suspect it will be very hard to change the legislation in a way that will reduce the number of people who have health insurance coverage. I don’t think this will be a wedge issue along the lines of “welfare”, which proved controversial because of the sense that the “undeserving” were receiving government payments. Instead, if Republicans are to mount an effective attack on the program, it will likely center on the cost implications, and they will likely push solutions that focus more on cost containment. Whether they can do so in the context of retaining the existing legislation, in the spirit of “mending it, not ending it” remains to be seen.

My initial reaction is that I’m not sure how Grayson’s bill does anything to contain Medicare costs, although I could very well be missing something. But, at first glance, its seems more like an exercise in position taking rather than a serious effort to expand insurance coverage. During the health care debate, there was serious consideration to expanding Medicare coverage to those below 65, but the problem is that for most people under age 65, the projected cost to enroll doesn’t seem worth the expected payout, particularly as eligibility drops. That means you need to provide subsidies (e.g., taxes) to keep premiums down – but that simply exacerbates the longterm funding problem Medicare is already facing. So, my initial (admittedly off the cuff) response is that – despite the bill’s simplicity and superficial political appeal – I don’t see this passing nor do I think it will help limit Medicare spending.

You wrote: If seniors perceive that the savings come through a reduction in Medicare services, opposition to this plan is likely to grow.
That is the key to the anger about the package. Many seniors realize they have been paying into two Ponzi schemes for most of their working lives: Social Security and Medicare. The Federal Government can keep its costs for both systems down by denying coverage.
The infuriating thing is being told that the anger has something to do with the President’s skin color. It has to do with the color green – as in money.